Yen Under Pressure as Markets Brace for Fed and BoJ Decisions

The Japanese yen continued to weaken against the US dollar on Monday, with the USD/JPY pair hovering near its eight-month peak around 153.00. Despite a softer greenback, the pair extended its seven-day winning streak as traders awaited major monetary policy decisions from both the Bank of Japan (BoJ) and the US Federal Reserve later this week.

The yen remains the weakest among the major global currencies this month, weighed down by Japan’s uncertain fiscal outlook and the government’s proposed stimulus measures. Investors expect the BoJ to keep interest rates unchanged, maintaining a cautious stance as policymakers evaluate the impact of new spending plans on inflation and growth. The move underscores the bank’s ongoing struggle to balance fragile domestic demand with persistent price pressures.

On the other side of the Pacific, the Federal Reserve is widely anticipated to deliver another rate cut following its earlier reduction in September. With key employment data delayed by the ongoing US government shutdown, the Fed’s decision is expected to focus on sustaining economic momentum amid slower inflation and lingering labor market concerns.

Markets are pricing in a quarter-point cut this week, with growing speculation of another adjustment before the end of the year. A continued easing path by the Fed—contrasted with the BoJ’s steady stance—has reinforced upward momentum in USD/JPY, keeping the pair tilted in favor of the dollar.

Traders now look ahead to a potentially volatile week as both central banks reveal their next moves. Any sign of policy divergence could further amplify swings in the yen, which remains vulnerable to shifts in global rate expectations and Japan’s own domestic policy dynamics.